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I think it's great that she investigated the issue and wrote a well put together article, but the heart of the problem has been known for a while: * No money d

I think it's great that she investigated the issue and wrote a well put together article, but the heart of the problem has been known for a while: * No money down loans * No proof of jobs required * Fannie & Freddie bought this junk * Repeal of Glass Steagal All the talk in the world won't change the fact that the solution requires legislators and law enforcers to have a strong backbone and prosecute those who committed fraud.

mattobrien 16y ago
Fannie and Freddie actually lost market share as the bubble really got going. They were prohibited from getting into most subprime, and tried to get around their regulations. Wall Street was the driver in buying up these shitty mortgages to put into MBS/CDOs -- and quite a few big banks bought mortage originators so they could get bigger margin on these deals. Unfortunately for them Wall Street couldn't find buyers for all of this toxic crap and/or were too dumb to realize how bad some of this stuff was (ie Citigroup). That's why you had a bank run on Bear Stearns, once people realized the collateral they were using in the repo market was effectively worthless.
- va_coder 16y ago
  Fannie and Freddie bought a lot of subprime. I had friends that worked there and told me so and I've read about it. Over the long term Fannie made a lot of people rich. Read Beating the Street by Peter Lynch. He made a fortune off Fannie. Taxpayers will pay, unfortunately. http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802111.html http://www.washingtonpost.com/wp-dyn/content/article/2008/08... Without Fannie and Freddie and the backing by the US taxpayer Wall Street would not have taken as much risk.
  - eavc 16y ago
    Maybe, but the underlying problems were the bad ratings assignments, shady conflicts of interest, and companies figuring out they could drive demand while betting against that demand.
- joe_the_user 16y ago
  The market shares involved with this dynamic is irrelevant. What mattered was the implicit guarantee provide by the government through Fannie & Freddy's involvement. You might have notice that became explicit guarantee at the end.

mattobrien 16y ago

Fannie and Freddie actually lost market share as the bubble really got going. They were prohibited from getting into most subprime, and tried to get around their regulations. Wall Street was the driver in buying up these shitty mortgages to put into MBS/CDOs -- and quite a few big banks bought mortage originators so they could get bigger margin on these deals. Unfortunately for them Wall Street couldn't find buyers for all of this toxic crap and/or were too dumb to realize how bad some of this stuff was (ie Citigroup). That's why you had a bank run on Bear Stearns, once people realized the collateral they were using in the repo market was effectively worthless.

va_coder 16y ago
Fannie and Freddie bought a lot of subprime. I had friends that worked there and told me so and I've read about it. Over the long term Fannie made a lot of people rich. Read Beating the Street by Peter Lynch. He made a fortune off Fannie. Taxpayers will pay, unfortunately. http://www.washingtonpost.com/wp-dyn/content/article/2008/08/18/AR2008081802111.html http://www.washingtonpost.com/wp-dyn/content/article/2008/08... Without Fannie and Freddie and the backing by the US taxpayer Wall Street would not have taken as much risk.
- eavc 16y ago
  Maybe, but the underlying problems were the bad ratings assignments, shady conflicts of interest, and companies figuring out they could drive demand while betting against that demand.
joe_the_user 16y ago
The market shares involved with this dynamic is irrelevant. What mattered was the implicit guarantee provide by the government through Fannie & Freddy's involvement. You might have notice that became explicit guarantee at the end.